Foreclosure Threatens New Town Way of Life

ByDoug McInnis

October 22, 1977

The house that Maria Alicia Wirth lives in is an attractive and pleasant, though its design is fairly common by suburban standards. She and her husband Michael could have bought the same thing elsewhere.

They didn't. Instead their house, which was built with tall trees left standing around it, is part of Newfields, a new town in the countryside here, seven miles northwest of Dayton, Ohio.

As Mrs. Wirth puts it now, "What we bought here is the dream." The dream was very much intact in March, 1975, when the family became the ninth to arrive at Newfields.

A planned community, Newfields was the product of a partnership between private builder Donald L. Huber and the federal government. It was to be one of more than a dozen carefully planned experimental communities that would, with federal aid, overcome the problems of urban sprawl, and racial and economic segregation.

But Huber had trouble selling enough lots to keep up his cash flow. He cited government red tape and the difficulty in gaining permission to sell lots in Newfields.

Very quickly, the project began to sour. In November of the year the Wirths moved in, the Newfields Development Corp. Stopped making interest payments on $18 million in federally guaranteed bonds that provided much of the money for the project. The 4,000-acre community, which was to have cost $700 million to $1 billion, and housed 40,000 residents over 21 years, was in financial trouble.

Problems with the new towns program have hardly been limited to Newfields. The Department of Housing and Urban Development's New Communities Administration has taken over two such towns. Flower Mound, Tex., and Gananda, N.Y., and Riverside in Minneapolis, and Riverton, N.Y.

The problems of new towns were sufficiently widespread that the New Communities Administration concluded at the end of last year that many were not feasible because of "basic flaws in program design and administration."

The Ford administration had considered abandoning Newfields, and when Jan and Dave Gordon arrived in Newfields last July, the new towns problems had been widely aired - so the publicity with keeping potenial buyers away and hurting the project economically. As of July, development had virtually ceased. Fewer than 100 units had been built.

By then, the Carter administration was trying to unsnarl Newfields problems, along with those of other troubled new towns. The plan was to bring together parties with a stake in Newfields, including banks with outstanding loans, the developer, and the nearby cities of Dayton and Trotwood. Among the unresolved issues were questions of fire, police, water and sewer services and road maintenance and construction.

In September, a tentative agreement was reached, but HUD said it was unsatisfactory. The New Communities Administration began moving toward forclosure.

"Every body around here was very disappointed," recalls Mrs. Gordon, the new arrival. "We had been given the impression that things were straightened out. We were completely taken aback when we heard of foreclosure."

Foreclosure at Newfields would threaten more than property values, which some residents worry about. It could mean that the original approached to development will not be continued. That plan called for placement of utility wires underground, planting or preservation of an unusual number of trees and shrubs, and controls over development that would prohibit such typical suburban deatures as chain link fences and outdoor television antennas.

Twenty per cent of the land was to be set aside for open space, under the original plan. A man-made lake of nearly nine acres was built; parking spaces were carefully landscaped. Houses and apartments were a cut or more above those found in nearby suburbs.

Residents say Newfields is a very pleasant place to live, and no one appears to be trying to bail out. Instead there appears to be a determined effort to save it.

There is also the chance, held out by the New Communities Administration and believed by some of its residents, that Newfields will survive as a new community.

Under the government's proposal, the city of Dayton would have acquired 2,200 acres of the original project. Dayton could then have annexed and then sold the land for taxable developmet. The land sales proceeds would have gone to Newfields creditors, including the banks. The federal government would have gotten $1 million from the deal plus interest at a 2 per cent interest on the amount beginning five years. Fifteen-hundred acres would be developed as a new town.

But five of the six parties involved attach conditions to their acceptance of the federal offer. One such condition provided for the two banks with outstanding Newfields loan - Winters National Bank and Trust Co. and the First National Bank of Dayton - to get paid before the federal government. The government said any conditions were unacceptable. It said its offer was non-negotiable. It called off the deal and started the paperwork for foreclosure.